Beware the Silent Boycott, Lest It Get Loud

The run-up to the 2016 presidential election cycle touched off a rash of boycotts organized through social media. Many slipped silently into the clutter of the Internet, but others broke through. Now, one of these silent boycotts is taking shape against the high-profile automaker Tesla — offering an opportunity to explore why automakers that promote their environmental profile also need to attend to the social aspect of ESG (environmental, social and governance) principles.

When boycotts work

Before a boycott is organized on social media, there needs to be a groundswell of consumer discontent. That's what happened in 2016 when then-candidate Donald Trump campaigned for president on a platform critics derided as based on bigotry and xenophobia. The well-known #GrabYourWallet boycott launched in October of that year, after months of public exposure to Trump’s inflammatory rhetoric. It was soon followed by the Sleeping Giants campaign, among others.

These boycotts took a strategic approach. Instead of simply urging consumers to stop buying certain products, they prevailed upon businesses and advertisers to stop engaging with the target of the boycott and his allies in right-wing media.

One red flag for Tesla: Consumer discontent

As regards to Tesla, two red flags crop up. First is consumer discontent. Tesla launched in 2003 with high marks for the environmental part of ESG. It was the first modern U.S. automaker to reach scale with an entirely zero-emission electric vehicle lineup, leading the way into the decarbonization movement.

However, in recent years the brand has suffered a well-documented series of reputational blows related to social and governance issues. The hits increased exponentially after Tesla CEO Elon Musk acquired the social media site Twitter in October of 2022, exposing his controversial views on social issues to constant, widespread attention.

Sure enough, earlier this week Reuters reported on several consumer surveys that indicate consumer discontent is contributing to the recent decline in Tesla sales in the U.S. and Europe. Among the sources cited by Reuters is the marketing research firm Caliber.

“It's very likely that Musk himself is contributing to the reputational downfall,” Caliber CEO Shahar Silbershatz told Reuters, partly because his name is so closely associated with the Tesla brand.

As reported by Reuters, Caliber found that 83 percent of Americans associate Tesla with its CEO by name. It would be difficult if not impossible for any other CEO in the entire automotive industry to match that level of recognition.

Another red flag for Tesla

The other shoe to drop involves the business-to-business element — which is also beginning to materialize, without any evidence of an organized boycott.

In November 2021, before Musk acquired Twitter, the rental car firm Hertz announced plans to buy 100,000 Tesla Model 3 cars over the next two years. Hertz cited “climate change benefits” among the reasons for the growing demand for electric vehicles.

By this year, the bloom was off the rose. Hertz did not come close to buying 100,000 Model 3s, which was just as well. In January, the company announced plans to sell its Tesla cars along with much, though not all, of its electric vehicle fleet — citing lack of interest from renters along with issues related to collision risks.

That same month, the Germany-based global rental firm SIXT also announced that it was phasing out its entire fleet of Teslas, to be replaced with a mixed fleet of electric vehicles, hybrids, and gas vehicles purchased from Stellantis for the North American and European rental markets. Among other reasons, SIXT noted that Tesla’s recent price cuts were undermining the resale value of rental fleets. Tesla’s recent labor and environmental controversies in Europe were not cited but may have also played a role.

The importance of leveraging social issues in a crowded electric vehicle market

In this day and age of heightened consumer engagement with social issues, these two red flags would normally spark some corporate damage control to ensure that the silent boycott does not build to an organized roar.

In terms of ESG, the social element is particularly important at this stage of the electric vehicle market. Because many more automakers are introducing environmentally-friendly cars of their own, the way they respond to social issues can help them stand out from the crowd.

Notably, Tesla has never had a public relations department or media representative, other than Musk himself. The company finally issued its first diversity, equity and inclusion (DEI) report in 2020, only to drop all references to DEI in its latest 10-K financial report to the U.S. Securities and Exchange Commission in January of this year.

How to avoid a silent boycott

In that regard, it’s instructive to take a look at three other automakers surveyed by Caliber. As cited by Reuters, Mercedes, BMW and Audi saw their consideration scores — which measure consumer preferences — climb slightly from January, even as Tesla’s score dropped by 8 percent.

Notably, all three of these rivals continue to sell gas vehicles, indicating that environmental issues are secondary to other reputational elements. None of the three are leaving anything to chance on ESG or DEI. They devote considerable space to these issues on their corporate websites.

“We foster a culture of appreciation and respect in which age, ethnic origin and nationality, gender and gender identity, physical and mental abilities, religion and belief, sexual orientation as well as social origin play no part,” Mercedes-Benz states forcefully “Alongside sustainability and integrity, diversity forms the foundation of Mercedes-Benz's sustainable business strategy,” the company adds, by way of introducing a detailed rundown of its engagement programs.

BMW also emphasizes, in great detail, the importance of integrating DEI principles holistically throughout its operations. “We find the topic of diversity so essential today that we offer diversity campaigns and events throughout the year that sensitize our employees and encourage them to exchange ideas with each other,” the company states.

Audi also takes nothing for granted. The company’s DEI statement starts off by acknowledging that the automotive industry as a whole needs to do better. “We recognize that people of diverse backgrounds — including women, people of color, LGBTQ+ individuals and beyond — are underrepresented within the automotive industry. At Audi of America, we are challenging the norms and challenging ourselves,” the company’s U.S. branch states.

It's not rocket science. It’s just plain common sense. All three brands have established a reputation for luxury and engineering excellence, and they are not about to risk it with an unforced error on DEI or ill-considered words on timely social issues. Building a strong DEI profile is part and parcel of today’s hotly competitive global automotive market, and top brands — well, most of them — are leveraging every angle to attract and keep their customers.

(Homepage image: Dmitry Novikov/Unsplash)